Attribution & Measurement
How gross margin changes your break-even ROAS
Break-even ROAS rises sharply as margin falls because less of each revenue dollar is available to pay for advertising.
Simple gross-margin formula
Break-even ROAS = 1 ÷ gross margin
Examples before other variable costs:
- 70% margin → 1 / .70 = 1.43x (143%)
- 50% margin → 2.00x (200%)
- 40% margin → 2.50x (250%)
- 30% margin → 3.33x (333%)
- 20% margin → 5.00x (500%)
Real break-even is often higher
Payment fees, fulfilment, shipping subsidies, discounts and returns reduce contribution margin further.
If a "50% gross margin" product leaves only 38% after variable costs, a 200% ROAS is not truly break-even. The fuller comparison is in contribution margin vs gross margin for ecommerce advertising.
Different products need different targets
A Google campaign selling products at 25% and 70% margins should not treat one dollar of conversion value as economically identical.
Break-even is not target ROAS
The business still needs contribution for overhead and profit, so operating target should generally sit above break-even unless LTV intentionally supports first-order loss.
Build ROAS targets that mean something economically
If your account uses one ROAS target across products with very different margins, send us an inquiry. We can build economically meaningful targets.